The 3rd World Circular Economy Forum was held in Helsinki, Finland, between 3.-5.6.2019 by the Finnish Innovation Fund Sitra. Where the previous two fora focused on technological opportunities and innovation, this time around there was a strong sense of urgency growing amidst the audience for immediate actions.
Indeed, a radical, disruptive shift is needed in our current economic system towards circular economy, if ecological disasters such as climate change, biodiversity loss and the overuse of natural resources are to be seriously combatted within any tolerable timeframe. There is now a dire need to move from great examples to a system level change, as well as a change in our collective value systems.
Circular measures need to be scaled up globally. For such progress, global policy and investments play a crucial role. This article aims to summarize some of the views presented on the topic during the WCEF 2019.
Circular economy is disruptive by definition
The current economic system is based on extraction and depletion, which has led to humanity facing a global emergency. At the WCEF 2019, it was evident that we need to renew our entire economic system in order to move to a circular economy, and we need to do it fast.
Circular economy is an all-encompassing concept, with an impact on all sectors and levels of society. It will change businesses and trade patterns, requiring repeated disruption of existing businesses, but also a disruption of our way of thinking and consuming. As it deals with the whole economic system, circular economy needs to involve everyone from governments and academia to companies and citizens.
From a natural capital aspect to meeting the goals of the Paris Agreement, circular economy holds huge potential. A change is, however, needed in policy, business and value systems. The urgency for actions is emphasized by the fact that humanity only has approximately 10 years left to dramatically switch the direction of our global economy to prevent a major climate disaster.
Progress so far has been slow. The Chief Economist of the United Nations, Elliot Harris, further fears that the momentum has been lost. The good news is that more and more companies have shifted to circular economy already, willing to tap into the huge economic, environmental and social potential that lies therein.
Global policy commitment urgently needed
Circularity cannot be reached with policies that promote unsustainable use of natural resources and unsustainable businesses. Legislators are the enablers of business environments, and therefore an overhaul of global policy is crucial.
Based on e.g. the presentation of the World Bank Vice President for Sustainable Development, Laura Tuck, some of the key leverages in scaling up circular businesses include:
- Getting rid of harmful subsidies, particularly for fossil fuels
- Taxing natural resources, i.e. putting a price on environmental damage
- Implementing right incentives to businesses
- More meticulate metrics reporting to evaluate progress
Societies and economies are interconnected and interdependent. Governance therefore has a huge role in enabling and creating a fair and level playing field for businesses. As the industry is basically facing only one cycle of investments before major environmental targets need to be met, no unnecessary certainty from a policy point of view is needed. Policy commitment and investments are absolutely crucial for a sustainable market disruption.
However, seen as there is no global government, integrating circular economy into global policy is a difficult task. The inclusion of plastic waste into the Basel Convention following China’s refusal to accept it from the Western countries anymore is an example of policies being modified based on identified needs.
Yet, a lot of such needs might still be hidden. It was not until China’s decision that it became evident how inefficient Western plastic recycling actually was. It is in fact our waste now ending up in oceans on the other side of the world from developing Asian countries where proper waste handling systems, law enforcement or policies are lacking.
Trade regime not fit for a circular economy
If no radical change takes place, the global use of materials is said to double by 2060. In such a case increased trade would be achieved at the expense of the environment. With cross-border collaboration, however, international trade has the potential to lead the way to a circular economy. The transition needs to be made fair for all countries, as emphasized by the Senior Director of the World Bank, Karin Kemper.
International trade flows will change as a result of circular economy. It is important to avoid unnecessary trade barriers. International policies are needed for a global solution, instead of the traditional local ones.
Indeed, the current trade regime is not yet fit for a circular economy. Trade negotiators are in a key position in terms of setting up trade agreements that promote circular economy. As per the Director of the Trade and Environment Division of WTO, Aik Hoe Lim, and the Deputy Director of the Environment Directorate of the OECD, Anthony Cox, setting up the rules of play for global circular trade would require at least:
- International, technical classifications and definitions of secondary raw materials, waste and hazardous waste
- Instead of a myriad of national standards and agreements, joint standards, wherein the technical aspects are agreed upon
- A re-evaluation of tariff structures and subsidies, incl. getting the pricing right for fossil fuels
From a nation-state perspective, the domestic capacities must also fit under such trade rules. For businesses, it is also necessary to develop meaningful circular economy metrics alongside the traditional KPI’s.
Bold authority action called for
The European Union boasts a Circular Economy Action Plan and a waste legislation reform that has been ambitiously named as the Circular Economy Package. Yet, policymakers find themselves desperately trying to catch up with innovative, future-oriented businesses in the circular context.
Indeed, many companies are moving a lot faster than what the legislative process is able to. A big part of the problem is that the current legislative system has been designed to serve the needs of a linear economy, with its compartmentalized needs. It is questionable whether sufficient measures at a sufficient scale can be achieved by simply tweaking a legislation set for a largely different purpose.
The European Chemicals Agency, for example, is only now waking up to the topic of circularity. This in spite of existing circular instruments incorporated in the EU chemical legislation, the REACH Regulation, in terms of e.g. recovered substances. It is evident that authorities are still very much working in linear silos, but also in specialized expertise silos within their own agencies. In a circular world, collaboration and cross-disciplinary expertise are desperately needed to understand the complex interface of current waste, product, chemical and environmental legislation.
In many cases, however, legislators might not even be aware of the necessary measures to promote the transformation to a circular society. Similarly, the existing mechanisms and procedures e.g. for granting End-of-Waste or by-product statutes seem to be poorly understood by local authorities, despite them having been implemented into national legislation already several years ago on the basis of the EU Waste Framework Directive.
Training and education are necessary on all fronts, but at the authority front especially. A daring, progressive attitude is key in making interpretations and decisions that are safe and sustainable for all, in the long run as well. Collaboration is of course a two-way street; businesses also need to bring their cases forward in a more discussive and cooperative way.
As a step towards closing the gap, Kimmo Tiilikainen, the Minister of the Environment, Energy and Housing of Finland, calls for a Circular Economy version 2.0 for the EU. This is sorely needed.
The cost of a market disruption towards circular economy is said to be manageable. However, it is too big for single companies or countries to bare. The power of economics can be used to drive consumer behavior in the right direction. Public procurement is also seen as a powerful tool in kickstarting circular economy and in increasing circular demand.
As communities, cities and municipalities also play an important role in acting as platforms for circular economy experiments, in enabling agile regional development and in challenging the “business as usual” mentality. A strong vision and leadership create the settings for a culture of engagement. Setting up a strategy that motivates the stakeholders and securing the funds for either experimental or definitive measures are the next steps. Once a plan, commitment and funding are in place, all the rest will follow. Where there is a will, there is a way.
From discussions to actions, in collaboration
Many circular economy roadmaps and strategies have already been drawn up in several EU countries, and in some countries outside the EU as well. Now is the time to act upon them. Measures towards the goal need to be taken in any form possible. The aim can be at prolonged lifecycles, maximal utilization of existing resources, waste recovery or prevention of waste generation in the first place.
Courage is also needed to redefine existing strategies, where they are found inadequate. Measuring the success of performed measures is key in a culture of disruption that is based on trial and error.
Partnerships across all sectors are necessary, as no single country or company can achieve a circular economy on their own. Achieving full circularity means addressing the whole value chain. A circular business therefore needs to embrace the concept not only within product design and manufacturing, but also in terms of supply chain management and reaching out to retailers.
The main message of the WCEF 2019 can be summarized as a need to scale up circular economy measures globally, in a fair, collaborative and inclusive way.
And in the words of Hans Bruyninckz, Executive Director of the European Environment Agency: enough with the discussions, sessions, fora and events, just do it! Let’s stop consuming and start living!